Allbirds’ sudden transformation into an artificial intelligence company lasted barely a day before Wall Street hit the brakes.
According to Bloomberg, less than 24 hours after the struggling footwear brand announced plans to abandon sneakers and rebrand itself as NewBird AI, the company’s stock plunged as much as 31%.
The drop followed Wednesday’s extraordinary rally, when shares skyrocketed more than 582% after Allbirds revealed it was pivoting from selling shoes to building AI compute infrastructure.
The reversal immediately raised questions about whether the surge had anything to do with the company’s actual prospects. Nearly 300 million shares traded right after the initial announcement, far above the stock’s normal daily volume of roughly 20 million, suggesting that momentum traders and retail investors had piled in.
“This has the feel of a meme stock, where emotions take over and logic and reason get thrown out the window,” said Adam Sarhan, chief executive of 50 Park Investments.
Sarhan said the speed of Allbirds’s rally suggested investors were reacting more to the letters “AI” than to any concrete business plan: “That the market actually rewarded the stock yesterday when it doesn’t seem to have any kind of actual AI edge tells me that froth, specifically AI froth, is picking up.”
The violent swing capped one of the strangest weeks in Allbirds’ history. Just 24 hours ago, the company said it would rename itself NewBird AI and raise up to $50 million to buy high-performance computing hardware that could be leased to customers.
According to the company, the new business will focus on providing “high-performance, low-latency AI compute hardware” to customers who cannot secure enough capacity from larger cloud providers.
The announcement represented a remarkable departure for a company that built its name on minimalist wool sneakers and sustainability. Founded in 2015 by former soccer player Tim Brown and renewable materials expert Joey Zwillinger, Allbirds became one of Silicon Valley’s defining brands during the late 2010s.
Its shoes were embraced by tech workers, worn by public figures including Barack Obama and Leonardo DiCaprio, and helped push the company to a valuation above $4 billion after its 2021 IPO.
That momentum did not last. Sales dropped nearly 50% between 2022 and 2025, falling from $298 million to $152 million as the company struggled with changing tastes, growing competition, and expensive attempts to expand into apparel.
Earlier this year, Allbirds shut all of its full-price U.S. stores. Last month, it sold its brand, intellectual property, and remaining inventory to American Exchange Group for $39 million, leaving the new AI venture as essentially the last chapter of the original company.
This article is for informational purposes only and is not intended as financial or trading advice. Anyone considering buying or selling stock should consult a qualified financial professional.
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